Posted on 06/18/2008 2:49:38 PM PDT by NormsRevenge
WASHINGTON (Reuters) - U.S. auditors urged the Air Force Wednesday to rerun its marathon, $35 billion competition for refueling aircraft, upholding a protest by losing bidder Boeing Co (BA.N).
The Government Accountability Office found the Air Force made "a number of significant errors that could have affected the outcome of what was a close competition between" Boeing and Northrop Grumman Corp (NOC.N).
"We therefore sustained Boeing's protest," Michael Golden, head of the a GAO bid protest unit, said in a statement.
Northrop was teamed with EADS, parent of rival passenger-jet maker Airbus. EADS (EAD.PA) had no immediate comment.
--snip--
The Air Force "conducted misleading and unequal discussions with Boeing" by telling the company it had fully satisfied a key performance criteria, then later determining that Boeing had only partially met the objective, the GAO said.
The GAO's recommendation to the Air Force punctuated a fight over what is likely to be one of the richest contracts in Pentagon history.
Lawmakers from states where Boeing has manufacturing plants were delighted with the GAO ruling.
"I am not surprised that the GAO identified significant errors in the selection process. The Air Force bought a tanker that doesn't meet their needs and has been waging a PR campaign ever since," Sen. Patty Murray, Democrat of Washington, said in a statement.
--snip--
Given a change in Air Force leadership earlier this month and the GAO findings, "Boeing has a respectable chance moving forward," Aboulafia said in an email. Boeing has proposed a tanker based on its 767 aircraft; Northrop offered a modified Airbus A330.
Douglas Harned, an analyst at Sanford C. Bernstein, was surprised by the GAO's ruling.
"It is a big positive for Boeing. It remains to be seen how the competition ultimately plays out," he said in a telephone interview.
(Excerpt) Read more at news.yahoo.com ...
There’s Boeing and their lobbyists again.. the Northrup plane was a better plane, and was actually going to employ MORE Americans than the Boeing plane. Lesson: If you want to successfully bid on military contracts, you need to own the generals.
Now that the Airforce is done moving the goal posts while Boeing had already kicked the ball, they can come back with a superior design based on the 777 which will crush the Airbust A330 design.
Obviously a $40 billion dollar contract has serious political considerations. The generals got fired so I guess you need to know Senators.
Lockheed is a good company. Boeing is a good company. Airbus is not a good company.
Actually the Northrop offering is based on the A330
The Boeing bid is a modified 767
So "able to use existing runways and hangers" not that important after all.
what's the program going to cost when 777-compatible infrastucture is added?
I have a friend pretty high up at the Pentagon who says it’s all about who’s pockets got lined the most....funny Loren Thompson, the analyst who first said the Northrop plane was the best, all of a sudden last week said “oh excuse me, the Boeing plane is the best” - it’s a pretty sad state when our military is NOT getting the best but getting what the pols have been paid to push....we down here in Mobile are shocked over this decision....now it will be 3-4 years AGAIN before a tanker contract is awarded and basically the GAO has said to hell with our war fighters....
June 18, 2008—The following is a statement from Randy Belote, Vice President of Corporate & International Communications for Northrop Grumman Corporation: "We respect the GAO’s work in analyzing the Air Force's tanker acquisition process. We continue to believe that Northrop Grumman offered the most modern and capable tanker for our men and women in uniform. We will review the GAO findings before commenting further."
Thanks for the links! I missed both of them earlier. :-)
This is a valuable post. I wonder how much $$$ is going to pass from one pocket to another. My late father, when retired from the AF, administered contracts as a civilian employee. He detested the influence of politicians and other vested interests on the lives of servicemen and service women.
Has there ever been an army anywhere at anytime in history that didn’t have this kind of influence? I’d say our system is pretty darn good considering.
You guys support was bought and paid for, so when checking to see who’s pockets were lined check your own. It is amazing how easy it was to get you to support buying a foreign airplane to replace up to 500 US built tankers.
BTW Boeing employs over 3000 people in Alabama. (and has for years)
Read what the GAO said. You can’t possibly come to that conculsion.
Also an Alabama company is starting its second protest of the KC-135 maintenance. So apparently Alabama is saying to hell with our current war fighters.
Sure...don't want to inject any facts here, but...
McCain's drive to preserve competition "put pressure on the Air Force to keep Northrop engaged," said Loren Thompson of the Lexington Institute, an Arlington, Virginia-based research group.
"The resulting concessions apparently skewed the selection process against Boeing," said Thompson, a defense industry consultant with close ties to the Pentagon.
"Much of the way that this contract was decided was heavily influenced by McCain," added Richard Aboulafia of Fairfax, Virginia-based Teal Group, an aerospace consultancy.
Do you seriously want to make political influence an issue?
Agree
and was actually going to employ MORE Americans than the Boeing plane.
Disagree. The KC-767AT would have sustained 28,707 jobs, while the Northrop Grumman/EADS KC-30 would have sustained 14,353 jobs. Both are a far cry from the "44,000 jobs" claimed by both sides.
Then we should not have been surprised at who won this first round, then, since EADS has a reputation that makes Boeing's look like a bunch of school girls:
Tainted Tanks – EADS comes with a pernicious past
Written by David N. Bossie Friday, 11 April 2008
Dwight Eisenhower once observed, “History does not long entrust the care of freedom to the weak or the timid.” The danger of weakness in prosecuting the War on Terror brings to mind the wisdom of Eisenhower’s prescient observation.
Consider the recent decision by the Department of Defense to award a $35 billion contract to build America’s fleet of refueling tankers to the French-owned European Aerospace Defense and Space Company (EADS). In one of the most colossal blunders of the struggle against the terrorists, we have handed over the future of a vital tool in the projection of U.S. power over to bureaucrats and politicians in Russia and France.
The tanker contract has sparked bipartisan outrage in Congress. A crescendo of opposition is now building, from conservative and pro-family U.S. Senator Sam Brownback to liberal Democrat Jack Murtha, to reverse the decision or deny funding to the Pentagon to implement it.
The lack of ease that accompanies the decision is hardly surprising; the catalogue of horrors at EADS reads like a “how not to” primer in a business-school ethics class. The company has a long and sordid history of bribing governments to purchase their airplanes, especially when competing with U.S. aerospace firms. Former CIA Director James Woolsey has called the practice rampant, and concluded that it was an integral part of EADS’ corporate culture. A European Parliament report in 2003 confirmed these corrupt practices, and that EADS has been embroiled in bribery scandals in Canada, Belgium, and Syria.
According to a New York Times report just last October, a French financial regulator turned over evidence of insider trading by senior EADS executives to prosecutors. The executives failed to inform the public about production delays in the A-380 jumbo jet while they quietly dumped their own stock. When the delays became public, unwitting shareholders watched their holdings plummet in value. The co-CEO and co-chairman of EADS resigned under pressure, and now some EADS executives may face indictments.
Even more worrisome is the power grab by Vladimir Putin, who is buying up the depressed shares of EADS like a corporate raider. The prospect of the authoritarian Russian leader, whose political opponents are harassed and jailed while prying journalists turn up missing or murdered, having a heavy hand in EADS affairs is deeply troubling. Russia opposed the invasion of Iraq and has sought to undermine U.S. plans to deploy a missile defense system in Poland and the Czech Republic.
The most troubling aspect of the tanker contract is the danger it poses to U.S. national security. According to a report by the Center for Security Policy, EADS has been a leading proliferator of weapons and technology to some of the most hostile regimes in the world, including Iran and Venezuela. When the U.S. formally objected to EADS selling cargo and patrol planes to Venezuelan despot Hugo Chavez, EADS tried to circumvent U.S. law by stripping American-built components from the aircraft. Chavez is now building an oil refinery in Cuba to keep Castro’s failed Communist state afloat, funding terrorists seeking the violent overthrow of Colombia’s government, and recently meddled in the presidential election in Argentina with secretly smuggled cash contributions. If EADS had its way, Chavez would now be advancing his anti-American designs in the Western hemisphere with U.S. technology and components.
EADS entanglements with Venezuela make the Pentagon’s decision to waive the Berry Amendment, which prohibits the export of technology that might be developed during the building of the tanker to third parties, indefensible. Given the sophisticated radar and anti-missile capabilities of military tankers, this is no small matter. Such technology falling into the hands of state sponsor of terrorism would devastate our war fighters.
And such a scenario is hardly unreasonable. EADS executives recently attended an air show in Iran and were caught red-handed trying to sell helicopters with military applications. When confronted, an EADS executive said the company was not bound by the U.S. arms embargo against Iran. EADS also sold nuclear components vital to exploding a nuclear device to an Asian company that in turn sold them to an Iranian front operation.
There is no question that America desperately needs to replace its aging tanker fleet, which dates to the time of Eisenhower, with new aircraft. Given the thousands of sorties flown by U.S. fighters and bombers over Iraq and Afghanistan, the tanker has become a critical tool in winning the war on terror. But outsourcing this vital aircraft to a proliferator of technology to our worst enemies, with partial ownership by the French and Russian governments, is an act of military malpractice.
Relying on foreign governments that are wary of U.S. power, as long-term suppliers for a strategic program so critical to projecting U.S. power around the globe is short-sighted and foolish. France has not demonstrated that it is a reliable ally of the United States, and EADS has not been a reliable supplier.
EADS must end its bribery problem, resolve its insider trading scandal, stop its proliferation of weaponry to bad actors like Chavez and Ahmadinejad, kick the Kremlin out of its board room, and stop using anti-competitive trade practices like subsidies from foreign governments. Then — and only then — can it compete for U.S. defense systems with U.S. contractors on a level playing field.
Lenin once said that capitalists would sell him the rope with which he would hang them. In this case, the Department of Defense is buying from EADS a rope that it might someday find around its neck. The Pentagon should cut its losses and reverse this ill-advised plan.
— David N. Bossie is president of Citizens United.
“I have a friend pretty high up at the Pentagon who says it’s all about who’s pockets got lined the most. . .”
Really?
How high is “pretty high?”
Colonel? Lt Col? If a general, how many stars?
When people post with a comment that they know someone that is high up in the Pentagon, those of us that work inside the Beltway roll our eyes. That was not an attack on you, just a suggestion for future postings.
I’d be careful, as you never know who may be posting, where they work, who they deal with, what direct knowledge and insights they may have, what involvement they may have had in the process (and not on either side, I add).
So, when you allege a “pretty high up” friend in “the Pentagon,” that really doesn’t carry much weight—you have to provide some sort of context.
You do realize “the Pentagon” is more than a single office? You do realize the Pentagon has many “high up” people in it that have no idea about the proposal or the GAO findings?
Was your friend in SAF or AF? OSD? ATL? AQP? Where? That is an important question. Please find out. What office? Perhaps the location? Floor of the Pentagon? What Ring?
These are important questions that need answering if you are to offer an alleged “expert” on the subject at hand.
Loren Thompson is an honorable man. No question about that. Loren explained to a few of us what had happened, why he changed his position: He said he has a knee-jerk response to protests.
Because too many protests are filed without cause and only to delay program execution, his initial reaction is to support the original selection. Moreover, he stated he trusts the selection system.
So, when the selection was announced, he met with the CSAF (you know, the fired one), and received a background brief. He also received other briefs, but as Loren said, he should not have taken the Air Force’s word before he wrote the first article because he had not received the arguments from the other side.
Once he received the other-side briefs, he re-evaluated the facts the Air Force spun him and changed his mind—publicly. That is not an easy thing to do in DC.
The Air Force made a mistake in the selection. GAO report defines each item of protest and shows exactly where they went wrong, and they cite applicable laws and regulations, and testimony. But somehow, the hundreds of people involved in the GAO office were all bought off?
The GAO report is out and it is the most direct and damning report I have ever seen. Research other protests and you can see why I say that. Here is link to the (mostly) full report (small redactions due to proprietary data): http://www.gao.gov/decisions/bidpro/311344.htm
DIGEST
Protest is sustained, where the agency, in making the award decision, did not assess the relative merits of the proposals in accordance with the evaluation criteria identified in the solicitation, which provided for. . .
CONCLUSION AND RECOMMENDATION
This decision should not be read to reflect a view as to the merits of the firms’ respective aircraft. Judgments about which offeror will most successfully meet governmental needs are largely reserved for the procuring agencies, subject only to such statutory and regulatory requirements as full and open competition and fairness to potential offerors. Foundation Health Fed. Servs., Inc.; QualMed, Inc., B-254397.4 et al., Dec. 20, 1993, 94-1 CPD para. 3 at 43. Here, we find, as described above, a number of errors in the Air Force’s conduct of this procurement, including the failure to evaluate proposals in accordance with the RFP criteria and requirements and to conduct discussions in a fair and equal manner.
But for these errors, we believe that Boeing would have had a substantial chance of being selected for award.[90] Accordingly, we sustain Boeing’s protest of the Air Force’s award of a contract to Northrop Grumman for the aerial refueling tankers. The protest is sustained. We recommend that the Air Force reopen discussions with the offerors, obtain revised proposals, re-evaluate the revised proposals, and make a new source selection decision, consistent with this decision. If the Air Force believes that the RFP, as reasonably interpreted, does not adequately state its needs, the agency should amend the solicitation prior to conducting further discussions with the offerors. If Boeing’s proposal is selected for award, the Air Force should terminate the contract awarded to Northrop Grumman. We also recommend that Boeing be reimbursed the reasonable costs of filing and pursuing the protest, including reasonable attorneys’ fees. 4 C.F.R. sect. 21.8(d)(1). Boeing should submit its claim for costs, detailing and certifying the time expended and costs incurred, with the contracting agency within 60 days after receipt of this decision. 4 C.F.R. sect. 21.8(f)(1). Pretty darned damning report.
Final Comment: Please note-—the GAO did not attack the aircraft, they attacked the process (flawed).
Final, final comment: Sad thing is, no matter the findings, no matter the facts, no matter the regulations, there will be a fair share of people out there that will employ the conservative version of the liberal rant: “Grumble, grumble, Haliburton, Bush-Cheney. . . grumble. . .” In the case of the tanker we hear: “Grumble, grumble, Boeing cheated. . .GAO/politicians bought off. . . grumble, grumble.”) I guess it’s easier to grumble away than admit the Air Force made a mistake.
The non-security-impinging redactions sought by the USAF and bidders surprise you at all?
Agreed. Certainly mistakes in process. And if we can break through the cone of silence and subterfuge, wherein the AF Procurement team blithely reposted EADs spin points, I think it is demonstrable that the EADs plane was not acceptable in a rather large number of particulars.
The USAF clearly felt it was under intense pressure from somewhere to keep EADs in the game such that it clearly waived game-ending disqualifications one after the other, which, as Loren concluded, essentially tilted the playing field irreversibly towards the EADs bid. A process of bias that had no surviving internal natural counter within the process after the politically-motivated interventions had undermined the integrity of their decision-making.
I’ll agree with that statement. The USAF was pressured or someone was. Think they need to look at some employee’s bank accounts, or if they have been offered a job after they are planning to retire ie a major command general.
reading the GAO verdict the EADS plane cannot perform certain emergency proccedures, cannot refuel certain types of aircraft, has boom envelope problems and a unproven boom.
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